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Apr 18, 2006

No More Aspirin, Please

If Massachusetts were a physician, I’d have mixed feelings about visiting him or her. Sure, Dr. Massachusetts would be incredibly persistent and would do its best to make sure I left its office feeling better than when I arrived, but on the other hand if I had any sort of serious condition, I’m skeptical about how far Dr. Mass. would go to treat the underlying causes, rather than just the immediate symptoms. Massachusetts would probably be an adept surgeon, but maybe not a great family doctor.

Last week, amid great fanfare, Massachusetts governor Mitt Romney signed a bill into law that would require all Massachusetts citizens to own at least a basic health insurance policy, in a program that has been likened to the standard requirement of mandatory liability insurance for all drivers. Massachusetts has been particularly proactive in health care requirements, making headlines in January when its legislature passed a law requiring Wal-Mart and other large employers to spend a minimum of 8% of payroll expenses on health benefits.

With over 40 million Americans currently without health insurance, surely mandatory insurance is a step in the right direction. Right?

Well, maybe. However, none of these regulations address any of the root causes of the U.S.’s glaring health disparities: the complex and confusing web of private insurance companies making up our market-based health care system. This legislation might provide a bit of temporary pain relief—and there’s nothing wrong with that—but its not going to cure the cancer.

The seemingly insurmountable obstacle of the U.S.’s current health care system is its inefficiency. In 2003, for example, the U.S. spent $5,635 per person on health care, far more than the next highest spender, Norway, which only shelled out $3,807 per person (these and the ensuing figures come from the Organisation for Economic Co-operation and Development). This was 15% of the U.S.’s GDP, a far higher percentage than in any other industrialized country. This comes despite the U.S. paying for only 44.4% of these expenses with public funds, much less than its peers spent.

From this data, we can see two prominent qualities of the U.S. health care system: it’s privatized, and it’s expensive. So, does all of this money buy us a better health care system? Although in the U.S. we surely have access to some of the most state-of-the art medical care available in the world, most of the data does not paint a very optimistic picture. Compared with the world’s other major industrialized powers, the U.S. has the lowest life expectancy and the highest infant mortality rate. When you combine these numbers with the high rate of the uninsured, it’s clear that we’re not getting anything that great for the extra money, at least in terms of the big picture.

Despite all of the talk about “inefficient government bureaucracy,” the data demonstrates that government-funded health care is more efficient than the market-based system currently dominating American health care. One of the reasons for this is that, as I have written before, 13% of the income earned by private insurance companies goes to profit and overhead—meaning that this money does not go back into the system—compared with only 1-2% (for overhead) in government programs. Another reason is the built-in inefficiency of dealing with millions of different entities paying for health care rather than just one (the government in a single-payer system).

Not surprisingly, studies have shown that most physicians prefer a single-payer health care system. For example, a 2004 study in the Archives of Internal Medicine found that 63.5% of Massachusetts physicians believe that a single-payer system “would provide the best care for the most people for a fixed amount of money.” Interestingly, these same physicians that overwhelmingly support a single-payer system apparently don’t think their peers do the same, with only 51.9% of those surveyed believing that the majority of physicians support a single-payer system.

Clearly, there is a need for some activism here from the medical community. Our society gives a great amount of respect to physicians, as they deserve, and it is likely that the medical community will have to become more outspoken on this issue before true universal health care becomes a viable political possibility. If a perceived lack of support in the medical community is currently holding physicians back, hopefully more studies along these same lines will give them the courage to stand up for their beliefs. Clearly it won’t be easy—especially in a political climate so hostile to anything resembling universal health care—but the need for an open and rational discussion on this issue is becoming increasingly pressing.

In the meantime, though, it looks like we can at least look forward to a steady dose of aspirin while we wait for a more substantial cure.

12 Comments:

  • I love the comparison (probably because I'm not from MA, though, eh?)

    By Blogger star firstbaseman, at Tue Apr 18, 07:14:00 PM  

  • Well said.

    By Blogger TBTAM, at Tue Apr 18, 09:36:00 PM  

  • Do great minds think alike or what? I posted on this very story not long ago. The Mass. plan is aspirin, a bandaid, a flimsy board laid over a yawning chasm. But I guess we have to give Romney & co. credit for doing something. (Poser: when is "something" worse than "nothing?")

    By Blogger Helen Stavrou, at Wed Apr 19, 01:20:00 AM  

  • They're definitely being proactive (and they get props for that from me for sure), but sometimes I think about what the Massachusetts politicians could accomplish if they put all of this energy toward a long-term solution.

    Nice post by the way.

    By Blogger Nick Anthis, at Wed Apr 19, 01:37:00 AM  

  • This phrase baffles me:

    "the complex and confusing web of private insurance companies making up our market-based health care system."

    The last three words are not what I expected. Surely you do not mean to say that the “insurance companies” represent the sum and substance of our health care system?

    It appears you mix up the means for delivering health care with the means for paying for health care.

    I think it is essential that the policy debate always distinguish between health care and health insurance, and take special care to make the disinctions very obvious and understood to the public. While this comment may seem obvious, I think it is also clear that these distinctions are often - perhaps usually - just not made. As these distinctions are lost, I fear that diagnosing the fundamental problems will be more difficult, and also that the public will become even more confused about what is going on. While that may suit certain politicians who want to use “reform of health care” to attract votes, that does not seem to me a good way to achieve meaningful or lasting reform.

    Simplifying the web of insurance, and providing subsidized insurance for more people won’t reform the health care system any more than taking aspirin to reduce fever will cure an infectious disease. In a real sense, insurance is comparable to an aspirin tablet - - and the uninsured public desperately needs this tablet. But let us not fool ourselves that the aspirin tablet is treating the disease, it is treating the symptom. Similarly, providing subsidized "insurance" will indeed treat the symptom of an incredibly expensive health care delivery system, but does not reform or fix that system.

    Insurance is expensive because health care is expensive, and not the other way around. Yes, I know that much administrative cost can be blamed on insurance and such admin costs are reported as part of "health care" costs - - but wring those out of the system and health care costs will still continue to rise each year. We will be back where we are today in 2-3 years. What then?

    BTW, the same OECD that you reference produces data that show the rates of increase to per-capita health care spending in many nationalized health systems actually exceeds the rate in the U.S. even when averaged over decades - this includes such countries as Germany, the U.K., Japan, Austria, Belgium, with France right behind U.S. These countries seem not to be controlling the growth of their health care spending any better than the U.S is now. These data raise questions that must be answered: why would one expect a nationalized or single-payer system to work better in the U.S. than in these OECD countries? what factors within the health care system itself, rather than in the payment mechanisms, are driving the cost of health care? what, if anything, can be done to mitigate those factors?

    Disclosure: What do I do for a living? I manage an employee-benefit plan covering about 40,000 people, most in the U.S. but a fair number of international employees too. We spend about $200 million per year. This year anyway.

    John Fembup

    By Anonymous Anonymous, at Sun Apr 23, 10:51:00 PM  

  • Thanks for your comments, John. While you make a good point that the phrase "private insurance companies making up our market-based health care system" might not be the most descriptive way to describe our system, I think it still gets at the heart of the issue. Anyone who has spent a significant time in health care will have seen how much of doctors' time (and their staff's time) is spent dealing with an unnecessarily complex health insurance system.

    I still stand by my initial analysis of the OCED data, which I think shows that the US system is overpriced. Even though we spend 48% more per person than the next highest spender, we still might not expect our system to be 48% better due to diminishing returns. Still, we would expected it to be substantially better, and while I think we do have a very advanced health care system (for some people), the quantitative measures do not back that up. Although it does not explain the entirety of the 48%, the 13% of income wasted in private insurance companies is surely a significant part of the problem. Although private markets have demonstrated an impressive ability to provide important services in some arenas, health care is clearly not one of them.

    By Blogger Nick Anthis, at Sun Apr 23, 11:19:00 PM  

  • "I think it still gets at the heart of the issue"

    & so we disagree. I think the cost of health care is closer to the heart of the issue and I think the difference between health care and health insurance is not mere semantics. I agree that the multiplicity of insurance arrangements wastes time for physicians' offices, but I absolutely do not agree that that is the biggest problem our health care system faces - or that it is even close. I would not have much confidence in a physician who disregarded the difference between symptom and disease - would you?

    "I still stand by my initial analysis of the OCED data"

    . . . and which I did not dispute. I simply suggested that other OECD data give an added perspective. There is no doubt that per capita health care spending in the U.S. is higher than anywhere else on earth. However, the other OECD data reveal that many single-payer systems are having as much or more trouble as we are in controlling growth of health care costs.

    "the 13% of income wasted in private insurance companies is surely a significant part of the problem."

    Which I also did not dispute. I do point out that even if 100% of these costs could be wrung out of the system costs would reduce by what? 13%? Health care costs are increasing in round numbers 10% per year. So in two years max we're back where we were before. Then what?

    I think there is no escaping these questions: what factors within the health care system itself, rather than in the payment mechanisms, are driving the cost of health care? What, if anything, can be done to mitigate those factors?

    John Fembup

    By Anonymous Anonymous, at Tue Apr 25, 01:36:00 AM  

  • I wouldn't doubt that higher costs for the medical services themselves contribute to the higher cost of health care in America, and I'd like to see some better data indicating just to what degree this is occurring. I imagine more than 13% of the difference, though, is due to the presence of private insurance companies, because of the added work (and therefore added cost) put on medical practices by the added paperwork. Despite your point about the rate of increase, the American system is still significantly and absolutely more expensive than any other, and the clearest difference between these systems is the fact that the American one is not single-payer.

    By Blogger Nick Anthis, at Tue Apr 25, 08:32:00 AM  

  • "Despite your point about the rate of increase, the American system is still significantly and absolutely more expensive than any other, and the clearest difference between these systems is the fact that the American one is not single-payer."

    Recall I already agreed that the cost of health care is far greater in the U.S. No doubt about it.

    What I think is still to be demonstrated is exactly how single-payer might result in lesser medical treatment costs in other countries. Does it hold down the rate of growth in health care costs? Apparently not. Does it reduce admin costs? Maybe. It also requires a certain amount of government bureaucracy that would offset some of the private-sector savings (Side question: how many people does NHS in the U.K employ?). Does single-payer reduce actual costs of medical treatment? If so how? By "rationing" either explicitly or by queue? By some other means? How?

    You don't seem to think my earlier questions merit response; that's OK, I have more.

    1. Medicare is a single-payer program. Why are not U.S. Medicare costs more nearly equal to the costs for the over-65 population in single payer countries? (& they are not - Medicare costs are higher.) Keep in mind Medicare Part A has a deductible equal to about $950 per hospital admission and Part B has an annual deductible that exceeds $100 and pays 80% of two-year-old charge levels after the deductible. Most single-payer plans aren't designed that way. So what can explain the apparent inability of single-payer to produce costs for the Medicare population that are consistent with a similar demographic in single-payer countries, especially when the basic coverage is less?

    2. OK, if 13% admin waste is not enough to establish my point, then say 40%. And pretend we can eliminate it all. Health care costs still grow 10% a year - in 5 years we're back where we started. What then?

    3. Here's another clear difference that must be considered: bad health habits in the U.S. e.g., poor diet, sedentary lives, lack of exercise, obesity, alcohol & drug abuse, stress in the workplace, violence, auto accidents, diseases related to tobacco, etc etc. None of these is unique to the U.S. but the combination of all of them may well constitute a perfect storm of ill health. And then, when the bills for treatment come in, we look at our INSURANCE system and say: garsh, we need single payer.

    Whole lotta denial going on here, is what I think.

    4. One more. Why do doctors test the crap out of their patients? Why do hospitals run all those "panels"? Is it all truly diagnostic? Or is some part of it perhaps a rational response against the threat of incurring a lawsuit for "failure to diagnose"? The costs of the additional tests for millions of people mitigates and might even exceed actual malpractice awards, so the lawyers can say "see, malpractice awards don't cost so much". Just asking.

    John Fembup

    By Anonymous Anonymous, at Wed Apr 26, 03:22:00 AM  

  • Thanks for your lengthy comments, John. Many of those questions I can't answer, obviously (I'm not avoiding anything). They are great questions, and we should be asking them--we should constantly be evaluating our health care system, which we would like to be the best in the world for how much we spend on it. Some of the other questions are just about semantics or maybe statistical details that I don't have. I think your point about the rate of growth compensating for reductions in cost in the long run is an important question, but I don't think it makes the need to reduce the costs associated with a private insurance system irrelevant.

    By Blogger Nick Anthis, at Wed Apr 26, 06:09:00 AM  

  • "but I don't think it makes the need to reduce the costs associated with a private insurance system irrelevant."

    Neither do I. Did I say that?

    Savings are savings. It makes sense to take aspirin to relieve symptoms. But let's not fool ourselves about what treats the symptom vs. what treats the disease.

    John Fembup

    By Anonymous Anonymous, at Thu Apr 27, 04:13:00 AM  

  • I think John has an interesting point. By comparing Medicare with single-player plans for other countries in the 65-and-over age group, we would have a better idea on how a single payer plan might perform in the U.S.

    As a physician, I am wary of more government involvement in health care. A case in point might be the medical privacy aspects of HIPAA. Although it encourages health care staff to be concerned regarding privacy (with a threat of $10k/violation), it has made many staff wary about disclosing information even to family members unless prior written permission has been obtained. So, now, according the the NYT, lawmakers are considering amending HIPAA to encourage information sharing. It believe it is impossible for legislators in D.C. to understand the demands of our healthcare system. Another case in point would be Medicare reimbursement to physicians. See Wikipedia topic Medicare in the U.S. to read how the U.S. government has held physician reimbursement fixed, essentially using inflation to deflate physician reimbursement. Poor medicare reimbursement to the primary care specialties is a direct cause of the declining interest in primary care in most medical schools and medical residencies.

    I also have to agree with John that by having third-party payers such as HMOs and insurance companies pay for medical care, people are insulated from the financial consequences of their bad health decisions. Poor diet in the U.S. leads to morbid obesity, hypertension, osteoarthrosis, diabetes, and heart disease. Smoking leads to emphysema, heart disease, and lung cancer. Reckless or risk-taking behavior leads to trauma (sometimes with exhorbitant medical bills and lost productivity). Obsession with appearance leads to unnecessary surgeries (e.g., lipoma removals). Feelings to love or guilt impel families to demand all-out medical care in hopeless cases. Those decisions might be different if junior's college fund was at stake. Maybe we wouldn't have second helpings, or we might start exercising, or we might quit smoking, or we might put up with that unsightly lump on our arm, or we might choose paliative care for our loved one's widely metastatic cancer. In 7 years, I think I have had only one patient ask for the cheapest effective treatment.

    John's point number 4 is well taken. The threat of litigation in the U.S. drives a great deal of medical testing. A case in point might be fetal heart tone monitoring during labor. I am not aware of any scientific evidence which shows it improves outcomes, yet not to do it would be considered a breech of standard of care. It certainly does result in an increased C-section rate.

    Lastly, the metrics of life expectancy and infant mortality are perhaps not the best ways to measure health care systems. We might wish to look at outcomes from specific medical diagnoses, such as life expectancy after breast cancer diagnosis or prostate cancer diagnosis, or outcomes after specific pre-natal diagnosis, or outcomes for patients who've had adequate pre-natal care (not just walking into the ER for their first interaction with a doctor during their pregnancy). In this debate their is a blurring of the issues of quality of health care and cost of health care.

    By Anonymous Anonymous, at Sat Jul 07, 05:53:00 PM  

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